Glencore's Mining Performance: A Concern for Investors

Glencore's poor performance in recent years has left investors disappointed, with shares slumping 20% this year. The company's mining operations are a key concern, with production misses leading to earnings downgrades and disappointments. Despite a history of production misses, Glencore is holding to its production guidance for this year, but it has a lot to do between now and December to meet its copper target. The setbacks come at a pivotal time for the industry, with miners turning to deals to seek relevance with investors.

Glencore's latest half-year report for 2025 reveals a mixed performance, with significant challenges in the mining sector and a focus on cost optimization and strategic changes. The company's Chief Executive Officer, Gary Nagle, commented on the progress made and the future outlook, emphasizing the company's efforts to streamline operations and enhance technical expertise.

The report shows that Glencore's Industrial Adjusted EBITDA decreased by 17% compared to H1 2024, primarily due to weaker coal prices and lower copper production. The copper business faced operational setbacks, including mine sequencing, lower grades, water constraints, and cobalt stockpiling, which significantly impacted H1 2025 production at key operations such as Collahuasi, Antamina, Antapaccay, and KCC. However, these operations are expected to see a substantial step-up in H2 2025.

Marketing Adjusted EBITDA contributed a solid $1.4 billion, down 8% from H1 2024. Overall, Glencore's Adjusted EBITDA of $5.4 billion was 14% lower than the previous year. Despite these challenges, the company expects healthy cash flow generation and deleveraging in H2 2025, with a 40/60 copper guidance production split between H1 and H2.

Glencore's net debt, including marketing lease liabilities, increased to $14.5 billion, up $3.2 billion from the end of 2024. The Net debt to Adjusted EBITDA ratio is 1.08x, reducing to 1x when reflecting the $900 million cash received on 2 July 2025 from the sale of Viterra to Bunge. The company expects its ordinary course Net debt to meaningfully reduce by year-end.

The report also highlights the completion of the Viterra sale, which provided $900 million in cash and shares in Bunge equivalent to 16.4% of the enlarged company. This transaction is viewed as surplus capital, and Glencore announced a share buyback of up to $1 billion, to be concluded by the time of its 2025 annual results in February 2026. The total announced 2025 shareholder returns increased to $3.2 billion.

Glencore's long-term through-the-cycle Adjusted EBIT Marketing guidance range was increased to $2.3 to $3.5 billion, with a new midpoint of $2.9 billion, representing a 16% increase from the previous guidance.

Despite the mixed performance, Glencore remains optimistic about its ability to participate in bridging the gap between resource demand and supply, leveraging the flexibility embedded in both its Marketing and Industrial businesses to respond to global needs.

References:
[1] https://www.glencore.com/media-and-insights/news/2025-half-year-report